The State Administration of Taxation ("SAT") has recently issued the Announcement on Matters Concerning the Deduction of Liability Insurance Premiums Before the Calculation of Enterprise Income Tax (the "Announcement") which shall be applicable to the final settlement and declaration of enterprise income tax for the year 2018 and thereafter.
The Announcement, as well as its relevant interpretations, expressly states that, pursuant to relevant provisions of the Law of the People's Republic of China on Enterprise Income Tax and implementing regulations thereof, insurance premiums paid, as required, by enterprises for the employer liability insurance, the public liability insurance and other types of liability insurance they take out, are considered deductible from the taxable income for the enterprise income tax purpose, since insurance premiums paid by enterprises for liability insurance, such as the employer liability insurance and the public liability insurance, they have taken out are costs actually incurred by them, and the Insurance Law also provides that liability insurance falls into the coverage of property insurance business.